<PAGE>   1
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, DC  20549

                                   FORM 10-Q

(Mark one)

  X          QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
-----                   SECURITIES EXCHANGE ACT OF 1934

               For the quarterly period ended SEPTEMBER 30, 1995
                                              ------------------

                                       OR

             TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
-----           SECURITIES EXCHANGE ACT OF 1934 FOR THE TRANSITION
                            PERIOD FROM     TO 
                                        ----  ----

                         Commission file number 0-2517
                                                ------

                         TOREADOR ROYALTY CORPORATION
             ------------------------------------------------------
             (Exact name of registrant as specified in its charter)


           Delaware                                        75-0991164
-------------------------------                       ---------------------  
(State or other jurisdiction of                          (I.R.S. Employer
incorporation or organization)                        Identification Number)    

                                                  

        530 Preston Commons West
           8117 Preston Road
             Dallas, Texas                                    75225           
----------------------------------------                    ----------
(Address of principal executive offices)                    (Zip Code)

Registrant's telephone number, including area code:  (214) 369-0080
                                                     --------------

Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding twelve months, and (2) has been subject to such
filing requirements for the past 90 days.

                   Yes    X               No
                        -----                 -----

Indicate the number of shares outstanding of each of the issuer's classes
of common stock, as of the latest practicable date.

             Class                        Outstanding at  September 30,1995
--------------------------------          ---------------------------------     
 Common Stock, $.15625 par value                       5,343,371
<PAGE>   2
                         PART I.  FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

                          TOREADOR ROYALTY CORPORATION
                           CONSOLIDATED BALANCE SHEET

<TABLE>
<CAPTION>
                                                            September 30,     September 30,     December 31,
                                                                1995              1994             1994
                                                            -------------     -------------    -------------
                                                             (Unaudited)       (Unaudited)
<S>                                                         <C>               <C>              <C>
  ASSETS
  Current assets:
     Cash and cash equivalents                              $   3,216,002     $   3,958,373    $   3,893,666
     Marketable securities, at market value                       727,650           820,260          674,730
     Accounts receivable                                          128,968           185,464          160,701
     Federal income tax receivable                                 68,014            21,431           68,014
     Prepaid expenses and deposits                                 61,228            31,403           14,340
                                                            -------------     -------------    -------------
         Total current assets                                   4,201,862         5,016,931        4,811,451
                                                            -------------     -------------    -------------
  Properties and equipment, less accumulated
    depreciation, depletion and amortization                    2,869,674         2,638,630        2,733,101
  Other assets                                                     58,465            57,576          105,352
                                                            -------------     -------------    -------------
        Total assets                                        $   7,130,001     $   7,713,137    $   7,649,904
                                                            =============     =============    =============

  LIABILITIES AND STOCKHOLDERS' EQUITY
  Current liabilities:
     Accounts payable and accrued liabilities               $      96,574     $      90,863    $     164,763
                                                            -------------     -------------    -------------
        Total current liabilities                                  96,574            90,863          164,763
                                                            -------------     -------------    -------------
  Deferred tax liabilities                                        241,372           242,901          223,380

  Other liabilities                                                   ---            14,145              ---
                                                            -------------     -------------    -------------
        Total liabilities                                         337,946           347,909          388,143

  Stockholders' equity:
     Preferred stock, $1.00 par value, 4,000,000 shares
        authorized; none issued                                       ---               ---              ---
     Common stock, $.15625 par value, 10,000,000
        shares authorized; 5,349,071 shares issued                835,792           835,792          835,792
     Capital in excess of par value                             3,560,042         3,559,382        3,560,042
     Retained earnings                                          2,021,530         2,573,662        2,526,164
     Minimum pension liability                                        ---           (37,965)             ---
     Net unrealized gain on marketable securities                 391,435           451,101          356,507
                                                            -------------     -------------    -------------
                                                                6,808,799         7,381,972        7,278,505
     Less 5,700 shares of common stock
        in treasury, at cost                                      (16,744)          (16,744)         (16,744)
                                                            -------------     -------------    -------------
       Total stockholders' equity                               6,792,055         7,365,228        7,261,761
                                                            -------------     -------------    -------------
       Total liabilities and stockholders' equity           $   7,130,001     $   7,713,137    $   7,649,904
                                                            =============     =============    =============
</TABLE>


    The Company uses the successful efforts method of accounting for its oil
    and gas producing activities.  See accompanying notes to the consolidated
    financial statements.


                                     - 2 -
<PAGE>   3

                          TOREADOR ROYALTY CORPORATION
                        CONSOLIDATED STATEMENT OF INCOME
                                  (UNAUDITED)


<TABLE>
<CAPTION>
                                                    For the Three Months Ended      For the Nine Months Ended
                                                           September 30,                  September 30,
                                                      1995            1994            1995          1994
                                                  -----------     -----------     -----------    ------------
<S>                                               <C>             <C>             <C>            <C>
Revenues:
  Oil and gas sales                               $   315,657     $   306,646     $   958,721    $  1,051,346
  Lease bonuses and rentals                            22,010          31,641          63,906         258,421
  Interest and other income                            41,627          53,051         159,454         153,545
                                                  -----------     -----------     -----------    ------------
    Total revenues                                    379,294         391,338       1,182,081       1,463,312

Costs and expenses:
  Lease operating expense                              83,279          58,948         245,213         216,406
  Dry holes and abandonments                              ---             ---         175,378          35,543
  Depreciation, depletion and
    amortization                                       69,317          73,237         179,280         222,177
  Geological and geophysical                           66,629          56,422         178,709         128,593
  General and administrative                          224,220         209,327         908,128         698,981
                                                  -----------     -----------     -----------    ------------
    Total costs and expenses                          443,445         397,934       1,686,708       1,301,700
                                                  -----------     -----------     -----------    ------------
Income (loss) before federal income taxes             (64,151)         (6,596)       (504,627)        161,612
Provision (benefit) for federal income               
  tax expense                                             ---         (11,470)            ---         (11,470) 
                                                  -----------     -----------     -----------    ------------
Net income (loss)                                 $   (64,151)    $     4,874     $  (504,627)   $    173,082
                                                  ===========     ===========     ===========    ============
Income per share                                  $     (0.01)    $         0     $     (0.09)   $       0.04
                                                  ===========     ===========     ===========    ============
Weighted average shares outstanding                 5,343,371       5,379,019       5,343,371       4,929,535
                                                  ===========     ===========     ===========    ============

</TABLE>


See accompanying notes to the consolidated financial statements.


                                     - 3 -
<PAGE>   4
                          TOREADOR ROYALTY CORPORATION
                      CONSOLIDATED STATEMENT OF CASH FLOWS
                                  (UNAUDITED)


<TABLE>
<CAPTION>
                                                 For the Three Months Ended       For the Nine Months Ended
                                                        September 30,                   September 30,
                                                    1995            1994            1995            1994
                                                 ----------     ---------      ------------    -----------                   
<S>                                              <C>            <C>            <C>             <C>
Cash flows from operating activities:
  Net (loss) income                              $  (64,151)    $   4,874      $   (504,627)   $   173,082
  Adjustments to reconcile net (loss)
    income to net cash provided by
    operating activities:
  Depreciation, depletion and amortization           69,317        73,237           179,280        222,177
  Dry holes and abandonments                            ---           ---           175,378         35,543
  Gain on sale of oil and gas
     properties and equipment                           ---           ---               ---        (24,731)
  Decrease  (increase)  in accounts  
    receivable                                       22,663       (11,035)           31,733          8,681
  Increase in federal income tax receivable             ---       (11,470)              ---        (21,431)
  Pension funding in excess of expense                   (1)        3,386                (1)        10,160
  Increase in prepaid expenses and deposits             ---       (17,063)              ---        (17,063)
  (Decrease) increase in accounts payable
    and accrued liabilities                          (8,314)       28,321           (68,196)       (42,073)
   Decrease in taxes payable                            ---           ---               ---        (70,039)
                                                 ----------     ---------      ------------    -----------                   
    Net cash provided by (used for)
     operating activities                            19,514        70,250          (186,433)       274,306
Cash flows from investing activities:
  Expenditures for oil and gas property
    and equipment                                   (21,105)       67,750          (487,887)      (403,064)
  Purchase of furniture and fixtures                    ---           ---            (3,344)        (8,055)
  Proceeds from sale of oil and gas
    properties and equipment                            ---           ---               ---         24,731
  Lease of undeveloped acreage                          ---           ---               ---         95,372
                                                 ----------     ---------      ------------    -----------                   
    Net cash (used for) investing activities        (21,105)       67,750          (491,231)      (291,016)
                                                 ----------     ---------      ------------    -----------                   

Cash flows from financing activities:
  Net proceeds from issuance of common
    stock                                               ---          (817)              ---      2,615,059
                                                 ----------     ---------      ------------    -----------                   
    Net cash provided by financing activities           ---          (817)              ---      2,615,059
                                                 ----------     ---------      ------------    -----------                   
Net (decrease) increase in cash and cash
  equivalents                                        (1,591)      137,183          (677,664)     2,598,349
Cash & cash equivalents, beginning of
  period                                          3,217,593     3,821,190         3,893,666      1,360,024
                                                 ----------     ---------      ------------    -----------                   
Cash & cash equivalents, end of period           $3,216,002    $3,958,373        $3,216,002     $3,958,373
                                                 ==========    ==========        ==========     ==========
Supplemental schedule of cash                                                                   
  flow information:
  Cash paid during the period for:
    Income taxes                                        ---           ---               ---   $     80,000
</TABLE>


    See accompanying notes to the consolidated financial statements.


                                    - 4 -
<PAGE>   5
                          TOREADOR ROYALTY CORPORATION

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
             For the three and nine months ended September 30, 1995


NOTE   1   -   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

     These consolidated financial statements should be read in the context of
the consolidated financial statements and notes thereto filed with the
Securities and Exchange Commission in the 1994 Annual Report on Form 10-K of
Toreador Royalty Corporation (the "Company" or "Toreador"). In the opinion of
the Company, the information furnished herein reflects all adjustments
consisting of only normal recurring adjustments, necessary for a fair
presentation of the results of the interim periods reported herein. Operating
results from the interim period may not necessarily be indicative of the
results for the year ended December 31, 1995.

CAPITALIZATION POLICY FOR OIL AND GAS ACTIVITIES

     The Company follows the successful efforts method of accounting for oil
and gas exploration and development expenditures.  Under this method, costs
of successful exploratory wells and all development wells are capitalized.
Costs to drill exploratory wells which do not find proved reserves are
expensed.  Acquisition costs of mineral interests in oil and gas
properties remain capitalized until they are impaired or a determination has
been made to discontinue exploration of the lease, at which time all
related costs are charged to expense. Impairment of unproved properties is
assessed and recorded on a property-by-property basis.  Upon sale or
abandonment of units of property or the disposition of miscellaneous
equipment, the cost is removed from the asset account, the related reserves
relieved of the accumulated depreciation or depletion and the gain or loss
is credited to or charged against operations.   Maintenance and repairs are
charged to expense; betterments of property are capitalized and depreciated.

EARNINGS PER SHARE

     Earnings per common share is based on the weighted average number of
shares, including common share equivalents (except where inclusion of such
common share equivalents would have an antidilutive effect), outstanding.

FEDERAL INCOME TAXES

     The Company accounts for income taxes in accordance with Statement of
Financial Accounting Standards No. 109  (SFAS  109),  "Accounting for
Income Taxes", which was adopted effective January 1, 1993.


                                     - 5 -
<PAGE>   6
                          TOREADOR ROYALTY CORPORATION

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
             For the three and nine months ended September 30, 1995


NOTE 2 - MARKETABLE SECURITIES

     Marketable securities are comprised of 105,840 shares in the San Juan
Basin Royalty Trust at September 30, 1995 and 1994.  The Company's cost in
this royalty trust is $126,258.  At September 30, 1995, the market value of
these securities which are designated as available for sale aggregated
$727,650, resulting in a gross unrealized gain in the amount of $601,392 and
an unrealized gain, net of tax effect, of $391,435. At September 30, 1994,
the market value of these securities was $820,260, resulting in a gross
unrealized gain in the amount of $694,002 and an unrealized gain, net of
tax effect, of $451,101.  At December 31, 1994, the market value of these
securities was $674,730, resulting in a gross unrealized gain in the
amount of $548,472, and an unrealized gain, net of tax effect, of $356,507.

NOTE 3 - NON-PRODUCING MINERAL AND ROYALTY INTERESTS

     Principal properties include mineral fee interests acquired by the
Company during 1951 and 1958. These interests totaled approximately 530,000
net mineral acres underlying approximately 870,000 surface acres in the
Texas Panhandle and West Texas.  It is recognized that the ultimate
realization of the investment in these properties is dependent upon future
exploration and development operations which are dependent upon satisfactory
leasing and drilling arrangements with others.  Additionally, the Company
owns working or royalty interests in Texas, New Mexico, Oklahoma, Arkansas,
Louisiana and Colorado.

NOTE 4 - INTEREST AND OTHER INCOME

     Items in interest and other income consist of:

<TABLE>
<CAPTION>
                                                                Three Months Ended
                                                                   September 30,
                                                         --------------------------------
                                                            1995                1994
                                                            ----                ----
 <S>                                                     <C>                <C>
 Interest - Certificates of Deposit and
            U. S. Treasury Bills                         $   34,062         $    40,444
 Distribution from Grantor Trust:
    San Juan Basin Royalty Trust                              7,565               8,607
 Management fees                                                ---               4,000       
                                                         ----------         -----------
                                                         $   41,627         $    53,051
                                                         ==========         ===========
</TABLE>


                                     - 6 -
<PAGE>   7
                          TOREADOR ROYALTY CORPORATION

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
             For the three and nine months ended September 30, 1995


NOTE 5 - CAPITAL

     On May 23, 1994, the Company privately placed 809,071 shares of common
stock for an aggregate consideration of $2,831,749. In its private placement
agreement with the purchasers, the Company granted them registration
rights, pursuant to which a registration statement on Form S-3 covering all
the shares was filed on June 22, 1994.  The registration statement was
declared effective July 11, 1994 and the Company is obligated to maintain
such effectiveness until May 23, 1996. In connection with the private
placement, the Company's placement agent received a five-year warrant to
purchase 106,867 shares of common stock at a price of $4.375 per share.
The placement agent has rights to participate in registered offerings of
common stock by the Company.

     The net proceeds to the Company from the private placement (after
deducting the placement agent's fee of $141,112 and expenses of approximately
$75,000) were approximately $2,616,000.

NOTE 6 - STOCKHOLDER RIGHTS PLAN

     The Company adopted a stockholder rights plan on April 3, 1995 designed
to assure that the Company's stockholders receive fair and equal treatment
in the event of any proposed takeover of the Company and to guard against
partial tender offers and other abusive takeover tactics to gain control of
the Company without paying all stockholders a fair price.  Under the
rights plan, the Company declared a dividend of one right ("Right") on each
share of Toreador common stock.  Each Right will entitle the holder to purchase
one one-hundredth of a share of a new Series A Junior Participating Preferred
Stock, par value $1.00 per share, at an exercise price of $12.00.  The
Rights are not currently exercisable and will become exercisable only in the
event a person or group acquires beneficial ownership of 20 percent or more
of Toreador's outstanding common stock or announces a tender offer or
exchange offer to acquire such ownership level. The Rights are subject to
redemption by the Company for $.01 per Right at any time prior to the tenth
day after the first public announcement of the acquisition by any person or
group of beneficial ownership of 20 percent or more of Toreador common
stock. The dividend distribution was made on April 13, 1995 to stockholders
of record at the close of business on that date.  The rights will expire on
April 13, 2005.


                                     - 7 -
<PAGE>   8
                          TOREADOR ROYALTY CORPORATION
             For the three and nine months ended September 30, 1995


ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
         AND RESULTS OF OPERATIONS

     Liquidity and Capital Resources

     Historically, most of the exploration activity on the Company's acreage
has been funded and conducted by other oil companies and this activity is
expected to continue. Exploration activity typically generates lease bonus
and option income to the Company.  If drilling is successful, the Company
receives royalty  income from the oil or gas production but bears none of the
capital or operating costs. In order to accelerate the evaluation of its
acreage as well as increase its ownership in any reserves discovered, the
Company intends to increase its level of participation in exploring its
acreage by acquiring working interests.  The extent to which the Company
may acquire working interests will depend on the availability of outside
capital and cash flow from operations. Currently, the primary sources of
capital for the financing of the Company's operations are cash flow provided
from revenues generated by its proportionate share in oil and natural gas
sales and existing cash, including that from a private offering completed
in 1994.  To the extent cash flow from operations does not significantly
increase and external sources of capital are limited or unavailable, the
Company's ability to make the capital investment to participate in 3-D
seismic surveys and increase its interest in projects on its acreage will
be limited. Future funds are expected to be provided through production from
existing producing properties and new producing properties that may be
discovered through exploration of the Company's acreage by third parties or
by the Company itself. Funds may also be provided through external
financing in the form of debt or equity. There can be no assurance as to
the extent and availability of these sources of funding.

     The Company has no debt and maintains its excess cash funds in
interest-bearing deposits and commercial paper.  The Company is not aware
of any demands, commitments or events which will result in its liquidity
increasing or decreasing in a material way.  From time to time, the Company
may receive lease bonuses that cannot be anticipated and, when funds are
available, the Company may elect to participate in exploratory ventures.
The Company also may acquire producing oil and gas assets which could require
the use of debt.

     Management believes that sufficient funds are available internally to
meet anticipated capital requirements for fiscal 1995.


                                     - 8 -
<PAGE>   9
                          TOREADOR ROYALTY CORPORATION

             For the three and nine months ended September 30, 1995

RESULTS OF OPERATIONS

     Three Months Ended September 30, 1995 vs
        Three Months Ended September 30, 1994

     Revenues for the third quarter 1995 were $379,294 versus $391,338 for
the same period in 1994. Oil and gas sales were $315,657 in 1995 versus
$306,646 in 1994.  The average gas price for the period dropped 15.7% to
$1.29 per MCF in 1995 from $1.53 per MCF for the same quarter of 1994. The
Company continued to experience a number of gas wells being shut-in or
curtailed during the past ninety days. This resulted in gas volumes
declining by 20.8% to 60,054 MCF in 1995 from 75,804 MCF in 1994.  Oil
volumes increased 26.4% to 14,833 BBL for the third quarter 1995 compared to
11,733 for the same period in 1994. Oil prices remained relatively flat
as the 1995 average price per barrel was $16.08 as compared to $16.24 per
barrel in 1994.  Interest and other income was $41,627 in 1995 versus
$53,051 in 1994.  Interest income decreased by $6,382 to $34,062 in 1995
from $40,444 in 1994 due to reductions in short term investment rates.
Royalty trust distributions declined by $1,042 to $7,565 in 1995 from $8,607
in 1994.  The acreage joint venture for which the Company received $4,000 in
management fees in 1994 ended in the fourth quarter of 1994.

     Costs and expenses were $443,445 in 1995 compared to $397,934 for the
same period in 1994.  Lease operating expenses were $83,279 versus $58,948
in 1994. These increased expenses are primarily a result of the Company's
participation in the successful development program occurring on the Company's
minerals in Motley County, Texas. Geological and geophysical costs were
$66,629 compared to $56,422 for the same period in 1994.  The geological and
geophysical costs increased due to the Company's continued efforts to evaluate
and develop Company-owned mineral interests.   Depreciation, depletion and
amortization declined by approximately $4,000 in 1995 to $69,317.
General and administrative expenses increased by $14,893 to $224,220 from
$209,327 in 1994. The increase results from the Company finalizing its
various state franchise tax obligations for the current year along with final
expenses associated with defending an attempt to take control of the
Company.

     The Company recognized a loss of $64,151, or $(.01) per share, for
the quarter versus a $4,874 net income for the same period of 1994.


                                     - 9 -
<PAGE>   10
                          TOREADOR ROYALTY CORPORATION

             For the three and nine months ended September 30, 1995

     Nine Months Ended September 30, 1995 vs
       Nine Months Ended September 30, 1994

     Revenues for the nine months ended September 30, 1995 decreased 19.2%
to $1,182,081 compared to $1,463,312 for 1994.  Oil and gas sales declined
8.8% to $958,721 in 1995 from $1,051,346 in 1994, resulting from the reduction
of equivalent barrel production in 1995 of 75,382 from 81,346 in 1994.
This decline in equivalent barrel production was compounded as the price
per equivalent barrel slipped $.20 to $12.72 in 1995 from $12.92 in 1994.
Lease bonus and rental income decreased by 75.3% to $63,906 in 1995 from
$258,421 in 1994. The decrease is due to the Company evaluating its own
mineral interests for future development. Interest and other income
increased 3.8%, or $5,909, to $159,454 from $153,545 in 1994.  Increased
investment balances resulting from the successful private placement of stock
in the second quarter of 1994 contributed to this increase.

     Total  costs and expenses through nine months of 1995 were $1,686,708
compared to $1,301,700 for the same period of 1994, representing a 29.6%
increase. Of this increase, 54.3% is attributable to general and
administrative expenses as a direct result of the Company defending an attempt
to take control of the Company by a competing slate of directors submitted
by a Boston-based group of investors, which increased these expenses to
$908,128 in 1995 from $698,981 in 1994. The Company completed its
participation in the evaluation of certain drilling commitments resulting in
expenses from dry holes and abandonments of $175,378 in 1995 versus $35,543
in 1994 representing 36.3% of the increase in total costs and expenses.
Geological and geophysical costs increased $50,116, to $178,709 from
$128,593, or 13.0% of the increase in total costs and expenses. The
remaining component, contributing 7.5% of the increase in total costs and
expenses, is lease operating expense which increased $28,807 to $245,213
from $216,406 in 1994. These increases were partly offset by the decline in
depreciation, depletion and amortization of $42,897 to $179,280 from $222,177
in 1994.

     The Company recognized a loss of $504,627, or $(.09) per share, in 1995
as compared to net income of $173,082, or $.04 per share, for the same
period in 1994.


                                     - 10 -
<PAGE>   11
                          TOREADOR ROYALTY CORPORATION

                               September 30, 1995

                         PART II.     OTHER INFORMATION

ITEM 6.   EXHIBITS AND REPORTS ON FORM 8-K.

        (a)   Exhibits

              The information required by this Item 6(a) is set forth in
              the Index to Exhibits accompanying this quarterly report 
              and is incorporated herein by reference.

        (b)   Reports on Form 8-K

              Form 8-K dated October 12, 1995 (Date of Event: October
              6, 1995), which reported the Company's acquisition of an 
              additional 11.5% working interest in the five well Matador Field, 
              and the Company's adoption of a Share Repurchase Plan.


                                   SIGNATURES

     Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.


                                         TOREADOR ROYALTY CORPORATION,

                                                  Registrant


                                              /s/ PETER R. VIG
                                       _________________________________
                                            Peter R. Vig, Chairman;
                                       the Principal Executive, Financial
                                            and Accounting Officer


November 13, 1995


                                     - 11 -
<PAGE>   12
                          TOREADOR ROYALTY CORPORATION

                               September 30, 1995

                               INDEX TO EXHIBITS


     Exhibit
     Number                                 Exhibit
     ------                                 -------

       27                           Financial Data Schedule





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